Universal coverage backed / Report finds varied reasons for high cost

Published 4:00 am, Thursday, March 4, 2004

Insurers, medical professionals and government officials agree that the brakes need to be put on the high costs and profits in the health care business, but there is wide difference of opinion over who is to blame for the situation, according to a report released today.

The report, which raises more questions than answers, also found that the participants favored some form of a system that offers health care coverage to all Californians.

"Everyone agreed that universal health care coverage was the way to go and that the key to that reform was cost control, but everybody blamed each other," said Jerry Flanagan, author of the 150-page report.

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The ambitious report was undertaken by the Foundation for Taxpayer and Consumer Rights, an advocacy group that supports universal health care coverage. Over the past two years, it has conducted interviews and town hall sessions with those who have a stake in the health care industry, including small-business owners, hospital officials, physicians, patients and HMO representatives.

According to the report, there is much disagreement among the participants over which parties are at fault for the perceived excesses in the health care system.

Health maintenance organizations blame rising hospital costs while hospitals and physicians said the HMOs wielded too much power, Flanagan said. Medical professionals blame managed care and, in some cases, hospitals; and insurers believe the doctors' groups control the market. In other cases, hospitals were criticized for acting like a monopoly.

"What the analysis has shown is that in every stakeholder group, there are bad actors," he said, adding that in order to solve the problem, "all the players will have to give something up."

While the participants disagree on the potential solutions, there is general consensus that the health care system needs more financial transparency. In other words, people need to know how much health care services cost, and profits and overhead of the companies providing the services.

"We spend $30 (billion) to $40 billion in California, a trillion dollars in the country, on health care. Where is the money going?" asked Archie Lamb, chief counsel of the California Medical Association, which represents doctors, in the report.

High profits at pharmaceutical companies, compensation of top insurance executives (averaging $15 million in salaries and stock options), and the lack of competition among the relatively few health plans in California were some of the excesses the report pinned on the insurance industry.

Many participants agreed that the problem isn't money but how it's allocated. But some felt more money needs to be put into the system.

"We have not been willing as a society to put enough of our ... tax dollars in the pot to make sure the trauma centers are OK ... that the uninsured have insurance," said Walter Zelman, former head of the California Association of Health Plans, at one of the town hall sessions.

The report calls for legislative efforts to regulate the health care industry much like a utility. That includes controlling insurance-premium increases, expanding the bulk purchasing of prescription drugs, and evaluating hospital and physician charges.

Some participants said the problem must be taken up at the national level.

"There are certainly improvements that can happen on the state level but, ultimately, there has to be a national commitment to figure out how to take care of ourselves," said Wade Rose, vice president of Catholic Healthcare West, a chain of Catholic hospitals based in San Francisco. "We figured out how to do it with freeways. We've figured it out to do it with defense ... you'd think we could do it with health care."

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